Sterling slips as trader nerves kick in ahead of crunch Brexit vote

Sterling has dropped from the seven-week highs of last week as investor nerves kick in ahead of tomorrow’s crunch Commons vote.

The pound rallied on Friday, hitting $1.286, on suggestions Article 50 could be extended if Theresa May loses her Brexit deal vote as predicted.

Read more: Sterling falls as investors fears of a general election grow

Sterling has since dropped to $1.283 – a 0.1 per cent drop for the day – as investors try to gauge the most likely Brexit outcomes.

Later today the Prime Minister is expected to urge lawmakers to back her deal by saying a no-deal Brexit is less likely than the UK remaining in the EU.

Analysts said traders had already priced in a defeat for Theresa May but that what happens next could send the currency either way.

“Tomorrow will be a crucial date for sterling and a defeat for May in the Parliament should take prices towards 1.27 immediately and depending on which option she chooses we may see further losses or a swift reversal,” ADSS analyst Konstantinos Anthis said.

“Of course, in the off chance that May succeeds in getting her plan approved the next stop for the pound lies at the 1.30 handle,” he added.

Jasper Lawler, analyst at London Capital Group, said sterling was looking beyond tomorrow’s vote.

Read more: Passing May's Brexit deal would send pound surging 

He said: “With more time to play with, a second referendum / no Brexit at all are growing possibilities, which are keeping the pound afloat.

“Should the pound push through Friday’s high of $1.2866, then a rally targeting $1.30 could be expected.”